WILMINGTON, Del. (AP) — A court battle over whether the bankruptcy case of casino giant Caesars Entertainment Corp. should proceed in Delaware or in Illinois was postponed Monday because of a snowstorm bearing down on the East Coast.
The judge presiding over Monday's hearing in Wilmington, Delaware, said he was concerned about the safety of attorneys, many of whom live and work in New York, where forecasters were calling for blizzard conditions.
U. S. Bankruptcy Judge Kevin Gross said he would resume the hearing on Tuesday by telephone.
The hearing pits Caesars against major creditor groups who want the case in Delaware. That's where the creditors filed an involuntary bankruptcy petition just days before Caesars' operating unit filed its own Chapter 11 case in Chicago.
"They defaulted on their debt and bet that none of their creditors would force them into bankruptcy involuntarily," said Thomas Lauria, an attorney for the trustee representing certain noteholders. "They lost the bet."
Creditor attorneys allege that one reason Caesars filed in Illinois is because it will be easier there to shield company officials from lawsuits over their pre-bankruptcy conduct, which creditors say included improper transfers to shield the operating unit's assets from creditors.
Caesars notes that it owns several Midwest properties and says Illinois is the best place to try to fashion a consensual restructuring that maximizes value for all stakeholders.
Paul Basta, an attorney for Caesars Entertainment Operating Co., said the court should defer to the company's choice of venue, notwithstanding creditor allegations trying to portray CEOC in a negative light.
But Gross noted that much of Caesar's argument centers around a restructuring agreement with certain senior creditors that the judge suggested still leaves lots of unanswered questions.
"Aren't you sort of manufacturing a restructuring agreement that in fact has holes all through it as a basis for venue?" Gross asked Basta. The judge also pointed to a ruling earlier this month by a federal judge in New York who said Caesars may have violated federal law by selling off assets and stripping away investors' guarantees without their approval, as creditors have alleged.